Business Minister Jenny Willott said the government will be adopting the recommendations made by Teresa Graham in her report on pre-packs, which is published today. The Graham review, launched last year, was charged with looking at ways to improve the results for creditors without imposing undue costs, and with examining the issues around sales to ‘connected parties’ say Harris & Co accountants Northampton #accountantsnorthampton
‘Teresa Graham has come up with a set of recommendations which will ensure people get back as much money as possible and make pre-pack deals more transparent. We will be working with business and industry to implement these recommendations in full and we believe it will help restore trust and confidence in pre-pack deals. We will monitor progress closely and will take the power to legislate if necessary,’ Willott said.
Graham’s recommendations include creating a ‘pre-pack pool’ where details of a proposed sale to a connected party can be shown to an independent person prior to the sale taking place. The aim is to increase transparency and give greater confidence to creditors that the deal has undergone independent scrutiny.
Graham also wants connected parties to complete a ‘viability review’ for the new company to improve its chances of success, and says valuations should be carried out by a valuer who holds professional indemnity insurance, to increase confidence that the sale is for a fair price. She says administrators should ensure proper marketing is undertaken in order to maximise sale proceeds.